European PC growth- Next two years <Context>
Tuesday April 28, 7:26 am Eastern Time
INTERVIEW-CONTEXT sees record Europe PC sales
By Neil Winton, Science and Technology Correspondent
LONDON, April 28 (Reuters) - Personal computer sales in Europe will hit
record highs over the next two years, boosted by tumbling prices and
demand for millennium bug-free products, British technology research
company CONTEXT said on Tuesday.
Consolidation would continue, with the biggest operators expanding their
business at the expense of smaller players, said Emmanuel Lalloz, senior
personal computer research analyst at CONTEXT.
Price pressures make profits elusive in the race to sell PCs, which have
become more like commodities. Profits will only be available to
companies that manage their stocks carefully, and can sell high-margin
products such as servers along with cut price PCs, Lalloz said in an
interview.
Last week saw Europe's personal computer shakeout continue. Siemens
Nixdorf (SIEG.F) of Germany, Europe's leading personal computer maker,
turned over most of its PC business to Taiwan's Acer Inc (2306.TW).
Siemens had struggled for years to wring profit out of its computer
unit. Acer will take over PC development and production from Siemens,
make a Siemens' plant its main European production site, and supply
computers that the German company will distribute under its own name.
Last Friday, Tulip Computers NV (TULN.AS) of the Netherlands (TULN.AS),
one of Europe's last independent makers of personal computers, sought
court protection from its creditors.
''There will be more pressure on prices. In the next months Intel's
(Corp (INTC - news)) new Celeron chip will allow manufacturers to sell
and build at much lower prices. We will see more pressure on prices,
especially on desk-tops. This won't stop, it will accelerate,'' Lalloz
said.
''The top five will consolidate market share; they are growing much
faster than the (average) market rate,'' Lalloz said.
On Monday, CONTEXT announced its preliminary figures for 1998's first
quarter, showing PC sales in western Europe jumped 21.1 percent to 5.57
million.
COMPAQ Computer Corp (CPQ - news) of the U.S. strengthened its position
as leader with a 14.8 percent market share. Second place International
Business Machines Corp (IBM - news) accounted for 8.3 percent, followed
by Dell Computer Corp (DELL - news; 7.8 percent), Hewlett-Packard Co (
HWP - news; 7.6 percent) and Siemens (5.6 percent).
Prices were under pressure.
''CONTEXT has calculated that, in one year, desktop prices have, on
average, gone down 18 percent in the UK and 22 percent in Germany. Over
the same period, portable prices have decreased 14 percent in the UK and
16 percent in France.''
Fears over the millennium computer bomb will spur sales. Some computers
programmed to read dates as two digits such as 98 or 87 may crash when
2000 dawns.
''Corporations want to make sure they have got rid of the Year 2000 bug
by buying new PCs - it's the simplest, most cost effective way in the
long-term - this is a big opportunity for the PC manufacturers,'' Lalloz
said.
Sales in 1998 and 1999 will explode.
In January, CONTEXT had predicted growth of 17.4 percent for 1998 to
22.9 million PCs.
''I think if anything that was conservative. Now we see growth of
between 18 and 20 percent for '98, much better than we expected one
quarter ago.
''In 1999, we see 20 to 22 percent growth, there's a lot of potential
out there. We won't be far short of selling 30 million PCs, probably
around 28.5 million,'' Lalloz said.
1997's 19.7 million was the previous best ever year for PC sales in
Europe. |
